Leon Inc. has the following capital structure, which it considers to be optimal:

Debt	25%
Preferred Stock	15%
Common Equity	60%

Leons expected net income this year is $34,285.72, its established dividend payout ratio is 30%, its federal-plus-state tax rate is 25%, and investors expect future earnings and dividends to grow at a constant rate of 9%. Leon paid a dividend of $3.60 per share last year, and its stock currently sells for $54.00 per share. Leon can obtain new capital in the following ways:

1. New preferred stock with a dividend of $11.00 can be sold to the public at a price of $95.00 per share.

2. Debt can be sold at an interest rate of 12%.

Project	Cost at t=0	Rate of Return
A	$10,000	17.4%
B	$20,000	16%
C	$10,000	14.2%
D	$20,000	13.2%
E	$10,000	12%

Calculate the Retained earnings breakpoint. Assume that Leon does not want to issue any new common stock.